EMC Labs September Report: Logical Analysis of the Start, Operation, and End of BTCsh in This Cycle

Author: 0xWeilan

++The information, opinions, and judgments regarding markets, projects, currencies, etc., mentioned in this report are for reference only and do not constitute any investment advice.++

According to Coinbase quotes, BTC reached a four-year low of $15,460.00 on November 21, 2022. We consider this day as the end of the previous cycle and the beginning of the current cycle.

From that day until September 30 of this year, BTC has been operating for 1,044 days amidst turmoil, and the timing is approaching the peaks of the previous two cycles (about 1,060 days after the lows). Using the method of刻舟求剑, BTC is expected to reach the peak of this cycle in October 2025.

5 Comparative Analysis of BTC Price Trends Across Cycles

The "cyclical law" of BTC originates from the speculative frenzy brought about by consensus diffusion and halving, and it remains the most valued cyclical indicator for traditional large holders of BTC. This group has played a decisive role in shaping the previous BTC peaks. It is the frenzied profit-taking sell-offs from this group that drained liquidity and ultimately led the market to complete the formation of the cycle peak.

Currently, this group is intensifying its sell-offs, and it seems that the "peak" is approaching. However, other peak indicators such as rapid price surges and sudden increases in new addresses have not appeared. This is puzzling: will this "cyclical law" continue to suppress the market and shape the cycle peak, or will it become ineffective? Will the BTC bull market that started in November 2022 end in October?

In this report, EMC Labs uses its self-developed "BTC Cycle Multi-Factor Judgment Model" to conduct a comprehensive analysis of BTC price trends since the beginning of this cycle, clarifying which market forces and underlying logic have truly driven the cycle forward, and ultimately providing our analysis and judgment on whether BTC will peak in October.

Phase One (2022.11~2023.09): Accumulation by Long-Term Holders

Looking back at history, the bankruptcy of FTX, one of the main buyers in the previous cycle, along with its lender Voyager Digital and other institutions, marked the completion of the cycle's clearing. After the bankruptcy of FTX, BTC's price fell from the bottom range of $20,000 to $15,476 (Coinbase data, same hereafter), with the lowest point occurring on November 21, 2024.

The bankruptcy of institutions like FTX intensified the market's bottoming out, but the fundamental force determining the end of the cycle was the profit-taking sell-offs by long-term holders (long-term investors). During market euphoria, short-term traders rushed to buy while long-term holders sold; when the market cooled, short-term traders sold while long-term holders began to accumulate.

Statistics on Position Changes of Long-Term Holders in the Previous Cycle

As in previous cycles, long-term holders began accumulating chips during the bear market phase of the last cycle. As the market entered the bottom phase, the scale of short-term losses began to decrease, and the buying power of long-term holders began to transform into upward price momentum, pushing BTC and the crypto market away from the bottom and into a new cycle.

At the same time, the post-pandemic era saw the Federal Reserve's interest rate hike cycle nearing its end, officially concluding on July 26, 2023. Due to anticipatory trading, the Nasdaq Composite Index bottomed out on October 13, 2022, and emerged from the bottom range in January 2023. BTC's price was largely synchronized with this, peaking about 9 to 10 months before the official end of interest rate hikes.

As the interest rate hike cycle neared its end, tightening liquidity led to bankruptcy cases among regional banks in the U.S. (Silicon Valley Bank, First Republic Bank), forcing the U.S. government to urgently release liquidity. The U.S. M2/DXY index began to bottom out and rebound, providing an external environment for the U.S. stock market and BTC to rebound from their lows.

U.S. M2/DXY

We define "2022.11~2023.09" as the first phase of this cycle. Along with the improvement in macro liquidity, the tension generated by the internal holding structure of the crypto market became the fundamental driving force for BTC's price increase in this phase.

The Federal Reserve's interest rate hikes officially ended in July 2023, and the accumulation behavior of long-term holders continued until the end of September 2023.

At this time, the future influential DATs companies and BTC Spot ETFs had not yet become dominant forces, and the retail trading crowd chasing prices had not yet awakened. During this phase, the issuance of stablecoins was in a shrinking state, with funds still flowing out of the crypto market. The cyclical accumulation by long-term holders was the main force driving the market upward.

In the first phase, BTC rebounded from a low of $15,476.00 to a maximum of $31,862.21, achieving a maximum increase of 105.88%.

Phase Two (2023.10~2024.03): BTC Spot ETF

U.S. inflation continued to decline, and the brief rebound in CPI from July to September 2023 was considered a false alarm, with July ultimately confirmed as the end month of the Federal Reserve's current interest rate hike cycle.

As market expectations changed, risk assets began to attract capital, and the shift in risk appetite prepared BTC for the initiation of the second phase of the market.

U.S. CPI

What truly drove BTC to initiate the second phase of this cycle was the anticipation of the approval of BTC Spot ETFs and the fifth halving of BTC in April 2024.

Traditional Wall Street asset management giants like BlackRock and Fidelity submitted applications for BTC Spot ETFs to the SEC in June 2023, with speculative trading funds quietly gathering.

Dividing the second phase by the SEC's approval of BTC Spot ETFs on January 10, 2024, the phase can be split into two halves: the first half (2023.10~2024.01.10) was dominated by speculative funds betting on ETF approvals, while the second half (2024.01.10~2024.03.14) was led by incremental funds brought in by the ETF channel (over $12 billion).

Monthly Statistics of BTC Spot ETF and Stablecoin Channel Fund Flows

In addition, the stablecoin channel completely broke free from the outflow trend in October, restoring inflows, and by the end of March, a total of over $26 billion was newly issued, becoming one of the main driving forces in the first half.

Since the initiation of this phase in October 2024, long-term holders began to reduce their holdings, with the reduction scale reaching as much as 900,000 coins by the end of the market.

The market in this phase was jointly dominated by speculative/investment funds from the BTC Spot ETF channel, on-site speculative/investment funds (manifested as a large issuance of stablecoins), and long-term holders' sell-offs. Buying power exceeded selling power, leading to a significant upward movement in BTC prices, and the market was very vigorous.

In the second phase, BTC rose from a low of $26,955.25 to a maximum of $73,835.57, achieving a maximum increase of 173.92%.

Phase Three (2024.04~2024.09): Halving Rebalancing

In the analysis of the second phase, we pointed out that the investment/speculative funds based on BTC halving, a traditional narrative, were also important factors determining the market. This was clearly reflected in the market of the third phase.

On April 19, 2024, BTC completed its fourth halving, reducing the block reward from 6.25 BTC to 3.125 BTC. Although over 95% of BTC has already entered circulation, the impact of halving on the actual supply in the market has significantly decreased, but the speculative market surrounding the halving indeed overdrew BTC's upward space. From April 2024 to September, BTC entered a prolonged period of consolidation lasting seven months.

From the fund statistics, it can be seen that after BTC reached a phase high in March, the inflow scale of funds from the BTC Spot ETF channel shrank but remained at a high level, while the stablecoin channel shrank even more, even turning into outflows at one point.

Monthly Statistics of BTC Spot ETF and Stablecoin Channel Fund Flows

During this period, although the Federal Reserve had stopped raising interest rates, rate cuts had not yet begun, and the inflow scale of ETF channel funds significantly decreased. Coupled with on-site funds leaving as the halving approached, the overdrawn market had to revise downward to seek a new price balance.

The market was able to rebalance without falling into a bear market, thanks to the stabilizing force from long-term holders. We noticed that after entering April, as liquidity receded, long-term holders stopped reducing their holdings and began to accumulate again after July. The behavior of long-term holders aligns with the historical characteristics of this group, sketching out a phase bottom range for the market.

In the third phase, the highest price was $109,588, the lowest price was $74,508, and the maximum decline was 32.01%, which did not exceed the BTC bull market correction threshold.

Phase Four (2024.10~2025.01): Trump's Crypto-Friendly Policy

Since the cessation of interest rate cuts in July 2023, the federal rate has remained high at 5.25~5.50 to suppress CPI declines. High interest rates gradually harmed the job market, and the Federal Reserve finally resumed rate cuts at the September 2024 meeting, completing a 75 basis point cut by the end of the year.

Rate cuts boosted the overall market's risk appetite, with funds flooding into the crypto market through BTC Spot ETFs and stablecoin channels. By the end of January 2025, the management scale of 11 BTC Spot ETFs in the U.S. exceeded $100 billion, setting multiple historical records. This indicates that the narrative of BTC as "digital gold" has gained favor on Wall Street, and BTC is transitioning from an alternative asset to a mainstream asset.

In addition to rate cuts, another catalyst for BTC's rise was the U.S. presidential election. In this campaign, Republican candidate Donald John Trump underwent a 180-degree shift in his attitude towards cryptocurrencies, becoming the most "crypto-friendly" presidential candidate in the U.S. His family business even issued the MEME token Trump after his victory.

After taking office, Trump signed executive orders supporting digital assets and blockchain technology, established a cross-departmental working group to review existing regulatory policies, announced the establishment of a "Bitcoin Strategic Reserve" and "U.S. Digital Asset Reserve," and signed the "GENIUS Act" to promote the compliant development of stablecoins. Additionally, he appointed "crypto-friendly" individuals as Secretary of the Treasury and SEC Chairman, effectively promoting the development of crypto assets and blockchain technology in the U.S. The friendliness of his attitude and the density of his policies are unprecedented, even beyond what Satoshi Nakamoto could have imagined.

With Trump's campaign, massive funds rapidly flowed into the crypto market through ETFs and stablecoin channels, forming the largest scale of capital inflow in this cycle to date. Meanwhile, long-term holders once again initiated sell-offs to lock in profits.

Statistics on On-Chain Value Realization of Bitcoin Network

Driven by the U.S. crypto-friendly policies, crypto assets gradually became mainstream assets in the U.S. In addition to BTC Spot ETFs, dozens of DATs companies represented by Strategy joined the competition to accumulate BTC and other crypto assets. These two groups have become the largest buyers in the BTC market.

BTC held by BTC Spot ETFs and DATs companies has exceeded or approached 5%.

With the large-scale involvement of BTC Spot ETFs and DATs companies, BTC has entered a major turnover era. A large amount of BTC is being transferred from early holders to the custody accounts of BTC Spot ETFs and DATs companies. This has caused the BTC held by centralized exchanges, commonly used by early crypto holders, to start declining significantly. By the end of September 2025, over 400,000 BTC had flowed out of the management addresses of centralized exchanges, valued at over $40 billion at $100,000 each.

Statistics on BTC Holdings in Major Crypto Exchanges

In this phase and beyond, this outflow continues, indicating that BTC is currently undergoing a historic turnover. Early investors (including those holding for over seven years) are cashing out substantial profits, while traditional funds are transitioning into long-term investors of this asset. The behavior of early investors is heavily influenced by the halving cycle, while DATs companies seem inclined to continue buying for long-term holding, and the behavior of BTC Spot ETF holders is more influenced by the performance of the U.S. stock market.

This change in holding structure complicates the cyclical shaping of BTC.

The market dynamics during this period stem from the speculative behavior driven by rate cuts and expectations of Trump's crypto-friendly policies, resulting in record capital inflows into the crypto market.

In the fourth phase, BTC's price rose from a low of $63,301.25 to $109,358.01 (recorded on January 20, 2025, the day Trump took office), achieving a maximum increase of 72.76%.

Phase Five (2025.02~2025.04): Black Swan

In our research framework, the fifth phase is a mid-term adjustment formed by external black swan events combined with emotional backlash after passionate speculation. The market turmoil caused by the pause in rate cuts and the tariff war reached a threshold both in time and space, ultimately forming this special phase.

Monthly Statistics of Capital Flows in the Crypto Market

Because the U.S. stock and crypto markets had priced in the continuation of rate cuts sufficiently, when the Federal Reserve stopped rate cuts in January 2025 and refocused on the mission of lowering inflation, both the historically high U.S. stock market and BTC entered a precarious state. When Trump announced tariffs that exceeded expectations, the market plunged into a crash mode.

The Nasdaq adjusted by nearly 17% from its peak, while BTC's maximum adjustment reached 32%. Although BTC's decline was significant, it still did not exceed the correction threshold in a bull market.

Ultimately, as the panic triggered by the tariff war and concerns about a hard landing of the U.S. economy subsided, both the U.S. stock and crypto markets achieved a V-shaped reversal in April, continuously reaching new historical highs after July.

Behind the V-shaped reversal, DATs companies, BTC Spot ETF channels, and stablecoin channels surged to buy, while long-term holders timely returned to accumulation after the decline, once again playing the role of market stabilizers.

In the fifth phase, the highest price was $73,777, the lowest price was $49,000, and the maximum decline was 33.58%, which did not exceed the scale of BTC's bull market correction.

Phase Six (2025.05~): Old Cycle and New Cycle

The market crash caused by the black swan was gradually recovered by bottom-fishing funds and long-term accumulation, and by July, BTC had reached a historical high of $123,000.

At this point, long-term holders initiated the third major sell-off of this cycle, which continues to this day. The recipients are DATs and BTC Spot ETF channel funds.

Before the rate cut in September, anticipatory trading continued to dominate the market, with significant capital inflows from July to September, but the inflow scale decreased, leading to a slight adjustment in BTC after the rate cut. Long-term sell-offs became the main activity affecting market movements.

Statistics on Changes in Long-Term Holder Positions of BTC

Since the third wave of price increases, long-term holders have been conducting a third round of large-scale sell-offs. According to on-chain data, long-term holders have locked in profits exceeding 3.5 million BTC in this cycle, reaching the threshold seen in previous cycle peaks. As of today, long-term holders are still continuing to sell BTC significantly.

Statistics on Profits Realized by Long-Term Holders of BTC (BTC)

In the past BTC halving cycles, BTC's halving and the accumulation and distribution of chips by long-term holders were decisive factors in forming the cycle, while the speculative sentiment surrounding halving that drives new investors to enter is a necessary condition for forming the cycle peak. In previous cycles, this speculative influx of new investors manifested as a surge in new addresses for Bitcoin network wallets.

However, with the diffusion of BTC consensus, the scale of new addresses that BTC can stimulate to create in each cycle has stagnated. Since 2024, the number of new BTC addresses has fallen to levels seen during previous bear markets. Of course, this cannot simply be interpreted as a decrease in new participants entering, as many investors began to participate through ETF channels after the approval of 11 BTC Spot ETFs in the U.S. in January 2024, significantly reducing the creation of BTC wallet addresses.

Statistics on New Addresses for Bitcoin Network

However, when observing the largest SCP platform Ethereum, we can notice that the new addresses in this cycle have exhibited the same situation.

Statistics on New Addresses for Ethereum

This leads us to believe that the structure of the BTC market has undergone a dramatic change, and the entire crypto market is entering a new stage of development. Simply predicting market peaks based on cyclical laws or thoughtlessly chasing hot trends to buy coins in anticipation of high returns has become outdated.

BTC may have already exited the old cycle and entered a new cycle, with its peak formation methods, peak timing, and bear market correction amplitudes potentially undergoing a complete change.

Conclusion

From the above review and observations, we draw a preliminary conclusion: the upward momentum of this bull market mainly comes from the impetus of industrial policies and incremental funds from traditional channels. Halving and industrial innovation have not brought in massive capital inflows as in the past, thus failing to trigger a comprehensive bull market in the crypto market where all coins soar.

Although during this bull market, the industry has also seen innovations in subfields such as Ethereum Layer 2, BTC Ordinals, Restaking, Solana revival, and DePhin, these innovations have attracted only pulse-like and extremely limited capital compared to the previous ICO and DeFi frenzy.

This has resulted in most coins and tokens in the crypto market experiencing only pulse-like phase increases since BTC restarted the new cycle bull market in November 2022, with even the most consensus-driven and widely used SCP platform token ETH at one point falling back to the starting point of the bull market in 2025.

BTC is moving out of the old cycle and into the new cycle, with funds from DATs companies and BTC Spot ETF channels attempting to reshape the logic and form of the cycle under the influence of market sentiment and their own logic. However, the long-term holders of BTC, who have played a decisive role in cyclical movements over the past 16 years, still hold over 15 million BTC, accounting for more than 70% of the issued BTC, and this group continues to act according to cyclical laws.

Factors supporting the notion that we have not yet seen a peak or have entered a new cycle include: the outstanding fundraising capabilities and long-term holding strategies of DATs companies, the U.S. continuing to introduce and implement crypto-friendly policies, and the trend of high-risk asset allocation triggered by the restart of the rate cut cycle.

Will long-term holders sell aggressively to drain liquidity and complete the old cycle peak, or will buying power in a rate-cut environment bury selling pressure and follow the U.S. stock market into a long bull new cycle? This game is still ongoing.

We lean towards the cycle being appropriately extended, with BTC peaking in October being a low-probability event. However, if long-term holders persist in continuous sell-offs, the end of the bull market this year is a high-probability event. The time and space for bear market adjustments after the bull market may also be significantly reduced, depending on the behavior of new buyers.

The end has already begun.

EMC Labs (涌现实验室) was established by crypto asset investors and data scientists in April 2023. It focuses on blockchain industry research and crypto secondary market investment, with industry foresight, insights, and data mining as its core competitiveness, aiming to participate in the thriving blockchain industry through research and investment, and to promote the benefits of blockchain and crypto assets for humanity.